TMI Blog1985 (5) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... . 15 to the First Schedule of the Act or were they parts of industrial machinery as given in entry No. 27 of the notification dated 21st October, 1975?" The statement of case indicates how this whole question has arisen. The assessee is a manufacturer of electrical equipment of various types, such as transformers, switch gears, switch boards, L.T. electric motors, agricultural pumping sets, monoblocks and coupled, etc. Two electric motors of 15 h.p. were sold to M/s. Jackson Engineers of Delhi and subjected to sales tax at the rate of 10 per cent. The dealer applied for under section 49 of the Delhi Sales Tax Act, 1975, to the Commissioner, Sales Tax, seeking a determination of the rate of tax. It was the case of the dealer that the electric motors were covered by entry No. 17 of the Third Schedule. The Commissioner did not accept the submission, but held that electric motors between 3 to 7 h.p. were exempt from the sales tax under entry No. 17, but not other electric motors; hence, the chargeable tax was at the rate of 10 per cent. On appeal before the Appellate Tribunal, reliance was placed on entry No. 17 to contend that the words 3 to 7 h.p. occurring in that entry covere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which schedule and under which entry, electric motors are included. The tax to be paid in respect of electric motors is dependent on the entry which operates in respect of such motors. There is no doubt that we are dealing with electric motors of 15 h.p. rating because the case of the department is that it depends on the horse-power rating of the electric motors. This is because of the wording used in entry No. 17 of the Third Schedule. That entry reads: "17. Agricultural implements including chaff-cutters and Persian wheels or parts thereof and electric motors including monoblock pump-sets of 3 to 7.5 horsepower. Explanation.-The goods covered by this entry do not include tractors and component parts, spare parts and accessories thereof." The explanation was added with effect from 16th September, 1976, and is not material for this case which relates to a sale made on 20th November, 1975. The question before the Tribunal was whether the words "3 to 7.5 h.p." occurring at the end of this clause covered only monoblock pump-sets or they covered electric motors or they covered all the articles. The construction of the words does not present as real a problem as was encounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... horse-power". Is it a qualification about electric motors or, is it a qualification about monoblock pump-sets? We do not think that these words can be used for qualifying monoblock pump-sets because electric motors include monoblock pump-sets. If all electric motors are exempt, then monoblock pump-sets using bigger or smaller electric motors will also be exempt. There is no purpose in using the words "of 3 to 7.5 horse-power" if they are not to qualify electric motors. The words "including monoblock pump-sets" are to be read as if they are in brackets, i.e., the proper meaning to be given to the clause is as follows: "Electric motors (including monoblock pump-sets) of 3 to 7.5 horsepower." The qualification in respect of horse-power cannot, therefore, be read as a qualification only of monoblock pump-sets, but is a qualification in respect of electric motors. In fact, the idea of the legislature appears to have been that certain types of electric motors were being used by agriculturists for the purposes of pumping water and those were normally of 3 to 7.5 horse-power. The purpose of giving the exemption was to permit agriculturists getting electric motors, which they normally use f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g" is used for purposes of clarification. For instance, in entry No. 1, cereals and pulses include all forms of rice, brans and cooked dal. In entry No. 2, flour includes atta, maida, besan and suji. In entry No. 10, milk includes boiled and sugared milk, but not condensed milk. In entry No. 26, betel leaves include prepared pan and in entry No. 34 scientific goods include scientific glass goods, geometrical and drawing goods used in schools and colleges. In entry No. 35, livestock includes poultry. The word "including" is, therefore, essentially used for clarificatory purposes. It qualifies about something which may be doubtful. Similarly, the word "excluding" is used when a doubtful thing is excluded, such as "colour pencils" are excluded in entry No. 25 from "crayons". A reference was made to Commissioner of Wealth-tax, Bihar and Orissa, Patna v. Kripashankar Dayasankar Worah AIR 1971 SC 2463, wherein the rule of strict construction in a taxing statute was explained. It was held that in the case of ambiguity, the benefit must go to the assessee. But, if the intention was clear but the drafting was not clear then the clear intention must be given effect to. A similar view was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t was a pump-set and it was held that as these pump-sets bad to be driven by electricity and there was no other alternative power supply, they were to be treated as electrical goods. There is then State of Andhra Pradesh v. Indian Detonators Ltd., Hyderabad [1971] 28 STC 84, in which a detonator was held to be not electrical goods. For this conclusion, the common parlance interpretation was adopted. In J.B. Advani-Oerlikon, Electrodes Pvt. Ltd. v. Commissioner of Sales Tax, M.P. [1972] 30 STC 337, the question was whether electrodes used for welding purposes were electrical goods. These electrodes were rods carrying electricity. It was held that they were not electrical goods because to be electrical goods two things were necessary-(a) that it should not be capable of being used without electricity, and (b) by its very nature it could be described as electrical goods. In State of Tamil Nadu v. Blue Star Engineering Co. Madras Private Limited [1977] 39 STC 194, the problem was whether a duplicating machine was "electrical goods". The problem was answered by the fact that there was a specific entry dealing with duplicating machines. It was held that where there is a specific entry, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w needs to be considered is the effect of the notification dated 21st October, 1975, issued under the third proviso to sub-section (1) of section 4 of the Delhi Sales Tax Act, 1975, whereby the Administrator fixed the rates of sales tax in respect of particular items. In the case of electronic and electrical goods, i.e., item No. 15, the rate was fixed at ten paise in the rupee, i.e., ten per cent. So, the rate is not 12 per cent, but 10 per cent. Then, there is another notification dated 21st October, 1975, issued under the same provision whereby the Administrator fixed the rates of sales tax for other items at lower, than 10 per cent. This notification is No. F. 4(73)/74-Fin. (G)(i). The other notification previously referred to does not have the letter "(i)" at the end of it otherwise it has the same number and is of the same date. Under the second notification, entry No. 27 reads: "Safety-razor blades and surgical instruments or parts of industrial machinery and plant." It is contended before us that the electric motors covered by the present case, which are of 15 horse-power, are really industrial machinery and plant because they are intended for operating an industry an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons of section 32 provide that depreciation is to be allowed in respect of buildings, machinery, plant or furniture owned by the assessee and used for the purpose of business or profession. Turning again to the language of entry No. 27, the peculiarity of the entry is that it refers to "parts of industrial machinery and plant" and not to the industrial machinery and plant itself. We think that the whole must consist of parts and if the parts are to be taxed at 5 per cent, probably the whole has also to be taxed at the rate of 5 per cent. However, that is not the question before us. If only the "parts" of industrial machinery and plant are to be taxed at 5 per cent, then can an electric motor be described as a part of industrial machinery and plant. As seen by reference to the Income-tax Act, 1961, there would be little doubt that an electric motor would either be treated as machinery or plant. No one can deny that a purchaser of an electric motor would be entitled to get the deduction mentioned in section 31 and section 32 of the Income-tax Act, 1961, if such a motor is used for business or profession. Is there any reason why we should give a different meaning to industrial machi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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